• Last week, soybean prices rose due to speculation that China’s purchases would increase. This is pursuant to the truce on the trade war between China and the USA. Recall that previously, China proposed an import tariff of 25% on US soybeans.

• In the meantime, there have been cancellations of soybean shipments from the USA. Bloomberg cited a report from the USDA (US Department of Agriculture) as saying that 949,000 tonnes of US soybean exports were cancelled a few weeks ago. The USDA said that the destination of the shipments was unknown. According to Bloomberg, there is a good chance that the soybeans were headed to China. Most of the soybeans were supposed to be delivered by the end of August 2018.
• Bloomberg also reported that China has scrapped an anti-dumping and anti-subsidy probe on imports of US sorghum. Chinese authorities found that the investigation “will increase costs for the downstream breeding sector and living costs for a majority of the customers”. The Ministry of Commerce cited a decline in pork prices and the loss-making breeding sector as reasons for scrapping the probe.
• Reuters said that China’s purchases of US corn have slowed significantly due to Beijing’s tight controls on processing genetically modified corn and worries that corn may be drawn into the trade spat with China. Traders and industry sources said that Chinese buyers have been cancelling multiple cargoes of corn so far this year. Some Chinese buyers have switched to Ukraine. Corn from the USA is mostly genetically modified.

• Euractiv reported that France recently gave the green light to Total to set up a biorefinery, which will use palm oil. This is in conflict with the European Parliament’s proposal to ban palm-based biodiesel by year 2021F. It has been agreed that the biorefinery would use up to 300,000 tonnes of palm oil per year.

• Bloomberg cited Jakarta Post as saying that Indonesia plans to raise the biodiesel blending target to 25%. A government official said that the government plans to issue the regulation early next year. Indonesia currently mandates the transportation industry to use diesel, which is 20% blended with biodiesel.

• Sugar prices rose last week on news that India may set up a 3mil-tonne sugar reserve following a bumper harvest. This would limit India’s sugar exports in the global market.??????? Bloomberg said that India may also set up a benchmark ex-factory price for sugar. Indian sugar mills are currently losing 8-10 rupees/kg on sugar sales. The proposals on the sugar reserve and benchmark ex-factory price may be considered by a ministerial panel soon.
• SGS said that Malaysia’s palm shipments fell by 18.0% in the first 20 days of May compared with the same period in April. The decline in palm exports was mainly due to a 72.4% drop in India’s demand and 77.7% slide in Pakistan’s imports. A 46.4% increase in palm shipments to China could not compensate for the weaker demand from India and Pakistan.

Source: AmInvest Research - 28 May 2018